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Financial & Managerial Accounting
Found in: Page 46
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

A start-up company often engages in the following activities during its first year of operations. Classify each of the following activities into one of the three major activities of an organization. F. Financing I. Investing O. Operating

1. Providing client services. 2. Obtaining a bank loan. 3. Purchasing machinery. 4. Research for its products. 5. Supervising workers. 6. Shareholders investing money in business. 7. Renting office space. 8. Paying utilities expenses.

Operating activities are the revenue-generating activities and all transactions are matched with the correct activity.

See the step by step solution

Step by Step Solution

Definition of operating activities

The operating activities are defined as the activities which help the business to generate revenues. They are related to the supply of goods or services.

Choosing the relevant activity

Transactions

Activities

1.

Operating Activities

2.

Financing Activities

3.

Investing Activities

4.

Operating Activities

5.

Operating Activities

6.

Financing Activities

7.

Operating Activities

8.

Operating Activities

Most popular questions for Business-studies Textbooks

Sanyu Sony started a new business and completed these transactions during December.

Dec. 1 Sanyu Sony transferred $65000 cash from a personal savings account to a checking account in the name of Sony Electric in exchange for its common stock.

2 The company rented office space and paid $1000 cash for the December rent.

3 The company purchased $13000 of electrical equipment by paying $4800 cash and agreeing to pay the $8200 balance in 30 days.

5 The company purchased office supplies by paying $800 cash.

6 The company completed electrical work and immediately collected $1200 cash for these services.

8 The company purchased $2530 of office equipment on credit.

15 The company completed electrical work on credit in the amount of $5000.

18 The company purchased $350 of office supplies on credit.

20 The company paid $2530 cash for the office equipment purchased on December 8.

24 The company billed a client $900 for electrical work completed; the balance is due in 30 days.

28 The company received $5000 cash for the work completed on December 15.

29 The company paid the assistant’s salary of $1400 cash for this month.

30 The company paid $540 cash for this month’s utility bill.

31 The company paid $950 cash in dividends to the owner (sole shareholder).

Required Analysis Component 4. Assume that the owner investment transaction on December 1 was $49,000 cash instead of $65,000 and that Sony Electric obtained another $16,000 in cash by borrowing it from a bank. Compute the dollar effect of this change on the month-end amounts for (a) total assets, (b) total liabilities, and (c) total equity.

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